The building and occupancy cost component of a cost center's BHR is based on the cost per square foot and the area (in square feet) occupied by cost center.

 

 

First, add up all of the building and occupancy expenses and divided the total expenses by the total square feet of your building or facility.

 

Building Lease/Mortgage/Rent	$102,663
Building Mortgage Interest/Loan	$16,820
Building Depreciation	$24,500
Building Repairs & Maintenance	$12,000
Fire Insurance	$14,500
Real Estate Taxes	$29,000
Total Annual Occupancy Expenses	$199,483
Total Square Feet of Building	25,000
Cost per Sq. Ft. ($199,483 / 25,000) =	$7.98

 

 

Next, get the square footage of each cost center, measure the length and width of the working area of each cost center or machine. Be sure to include the immediate areas required to work on the machine such as the staging area delivery areas. The balance of the building area (aisles, common areas, offices, etc) will become overhead.

 

 

 

 

Now multiply the square footage of the cost center times the cost per square foot.

 

4/C Heidelberg (16’ x 38.7’) 620 square feet   x   $7.98   =   $4,950

 

 

 

 

 

For more information about the Cost Rates Advisor www.costratesadvisor.com budgeted hourly rates software click here.

 

By: Craig L Press, President, Profectus Inc.